Talks of more stimulus from the White House as well as falling coronavirus cases in some parts of Europe and the U.S. got traders buying high-yielding assets today.
But can the bulls keep up the pressure?
Take note that a “flattening” curve may not stay flat for long. Singapore, Japan, and South Korea, for example, are seeing a “second wave” of new cases that are prompting new measures from authorities.
This is partly why I think there’s opportunity in shorting GBP/USD on the 1-hour time frame.
Currency Snapshot:
Fresh Market Headlines & Economic Data:
- New Zealand’s business confidence plummets in Q1 2020
- Australia’s services sector plunges as pandemic hits in March
- Japan Feb wages up; real pay remains positive
- Rush to buy masks and toilet paper slows Japan’s decline in household spending
- Australia shows tighter trade surplus, ABS suspends trend series
- ANZ job ads crash in March
- RBA keeps rates at 0.25% as expected in April
- RBNZ commits to buying up to $3 billion of local government bonds, in addition to $30 billion of central government bonds
- Asian shares cautiously gain on virus hopes, dollar slips
- Oil gains as hopes rise for production cut amid coronavirus outbreak
Upcoming Potential Catalysts on the Economic Calendar:
- Japan’s leading indicators at 5:00 am GMT
- Switzerland’s unemployment rate at 5:45 am GMT
- Germany’s industrial production at 6:00 am GMT
- France’s trade balance at 6:45 am GMT
- U.K.’s Halifax house price index at 7:30 am GMT
- Italy’s retail sales at 8:00 am GMT
- Canada’s IVEY PMI at 2:00 pm GMT
What to Watch: GBP/USD
GBP/USD is trading just under the big 1.2300 handle that had served as support last week.
Now that the pair had broken below the level, the bears have managed to contain Cable below what looks like a descending trend line on the 1-hour chart.
The cherry on top is the 100 SMA possibly crossing below the 200 SMA if the pound continues to lose pips against the dollar.
The only data point on the docket, the U.K.’s Halifax house price index, is expected to slow down from 0.3% to 0.2% in March. Concerns over Boris Johnson, and the fading of the post-Queen’s speech optimism could also weigh on the pound.
Shorting at a sustained bearish momentum is a good play if you’re expecting further losses for GBP/USD.
If you’re convinced that the lack of fresh catalysts could extend the risk-friendly mood, however, then you can also aim for the previous highs near the 1.2450 area.
Not sure where to place your entry and stop loss levels? Check out this GBP/USD volatility analysis for clues!